F9

Question 1

What are unrestricted funds in NFP accounting?

Answer 1

Funds that the entity can spend freely. No donor-imposed restrictions

Ex: Board Discretionary funds, contributed services,

Question 2

What are restricted funds in NFP accounting?

Answer 2

Funds that have donor-imposed restrictions on timing/purpose of use.

• Temporarily or permanently restricted
• Must be restricted by donors, creditors, lendors, laws, regulations, or grantors

A promise to pay a certain amount in the future is recorded as temporarily restricted funds by the NFP entity/recipient!

Question 3

How do you determine the reporting status of a governmental unit?

Answer 3

Can it govern itSELF?

Separately
Elected governing body
Legally separate entity
Financially independent status

• If all four of these are met, it is a primary government
• If any of these are not met, it is a component unit

Question 4

What is a blended component unit?

Answer 4

• Its governing body is substantially the same as its respective primary government
• Exclusively serves its primary government
• Not a legally separate entity

Question 5

What is a discrete component unit?

Answer 5

Doesn’t meet the criteria for blended.

Shown in a separate column in the primary government’s F/S’s

Question 6

What information is required on a government’s F/S’s in regards to its budget and actual performance

Answer 6

A budgetary comparison schedule for the general fund and for each major fund that has a legally adopted annual budget

• Mandatory for general fund and special revenue fund
• Should present original and amended info

Question 7

In a SCF for governmental entities, what are examples of operating cash flows?

Answer 7

• Operating activities result from providing services and producing/delivering goods, plus all transactions that aren’t defined by other classifications.

Examples: Payment for services to other funds, including payment in lieu of property taxes

Question 8

In a SCF for governmental entities, what are non-capital financing activities?

Answer 8

Borrowing for non capital purposes, grants or subsidies, property tax revenues, etc.

Question 9

In a SCF for governmental entities, what are capital and related financing activities?

Answer 9

• Buying/selling capital assets
• Borrowing money and repaying principal AND INTEREST (different than for commercial entities!)
• Capital grants
• Special assessments levied for capital acquisitions

Question 10

If a donor required you to hold a security to maturity, how would you record this for NFP organizations?

Answer 10

• This would be included in Temporarily Restricted Funds, and then would be moved to Unrestricted Net Assets upon maturity
• • NOT unrestricted contribution revenue!!

Question 11

If a NFP has equity investments in several different accounting funds, how can it pool its investments?

Answer 11

It can pool ALL investments, but must allocate any pooled investment G’s or L’s equitably

Question 12

An unrestricted cash contribution received by a NFP should be reported in its Statement of Cash Flows as…

Answer 12

An operating activity!

Along with program income, applicable agency transactions, and interest/dividend income from investments

Question 13

A NFP receives pledges that are:

• Unrestricted $400
• Restricted for capital purposes $300

All are legally enforceable… 5% estimated uncollectible. Record receivable as?

Answer 13

$400 + $300 = $700 * .95 = $665! All legally enforceable pledges are recorded

Question 14

Cash receive by a NFP with donor-imposed restrictions limiting use to a long-term purpose (ex: construction of building) are shown in what category on a NFP’s SCF’s?

Answer 14

• FINANCING activities!!